Work by Amihud and Mendelson (1986,1991)
A) argues that investors will demand a rate of return premium to invest in less liquid stocks
B) may help explain the small firm effect
C) may be related to the neglected firm effect
D) b and c
E) a,b,and c

Question

Quizplus · Accepted Answer

Amihud and Mendelson's work argues that investors will demand a rate of return premium to invest in less liquid stocks (A), which helps explain the small firm effect (B) and may also be related to the neglected firm effect (C). Therefore, answer E is correct.